Budgets for Cash Collections from Sales and Cash Payments for Purchases. Templeton Corporation produces windows used in residential construction. The dollar amount of the companys quarterly sales and direct materials purchases are projected to be as follows (this information is derived from the previous exercises for Templeton Corporation):

	1st	2nd	3rd	4th
Sales	$8,800,000	$11,000,000	$11,440,000	$10,560,000
Direct material Purchases	$820,908	$995,346	$1,017,504	$947,352

Assume all sales are made on credit. The company expects to collect 60 percent of sales in the quarter of sale and 40 percent the quarter following the sale. Accounts receivable at the end of last year totaled $3,000,000, all of which will be collected in the first quarter of the coming year.

Assume all direct materials purchases are on credit. The company expects to pay 70 percent of purchases in the quarter of purchase and 30 percent the following quarter. Accounts payable at the end of last year totaled $325,000, all of which will be paid in the first quarter of this coming year.

Required:

1. Prepare a budget for cash collections from sales. Use a format similar to the top section of Figure 9.11 "Cash Budget for Jerrys Ice Cream".

Jerry's Ice Cream Cash Budget Year Ending December 31 Quarter 1 2 3 4 Year $ 180,000 144,000 Cash collections from sales* Fourth quarter prior year (assumed) First quarter ($240,000 sales) Second quarter ($288,000 sales) Third quarter ($360,000 sales) Fourth quarter ($312,000 sales) Total cash collections $ 96,000 172,800 $ 115,200 216,000 $ 144,000 187,200 $ 331,200 $ 180,000 240,000 288,000 360,000 187,200 $1,255,200 $ 324,000 $ 268,800 $ 331,200 (30,000) (59,472) Cash payments for purchases of materials** Fourth quarter prior year (assumed) First quarter ($84,960 purchases) Second quarter ($102,400 purchases) Third quarter ($115,200 purchases) Fourth quarter ($101,920 purchases) Total cash payments for purchases (25,488) (71,680) (30,720) (80,640) (34,560) (71,344) $(105,904) (30,000) (84,960) (102,400) (115,200) (71,344) (403,904) $ (89,472) $ (97,168) $(111,360) Other cash payments*** Direct labor Manufacturing overhead *** Selling and administrative*** Capital expenditures Total other cash payments (53,040) (45,400) (55,000) (63,960) (49,600) (55,000) (76,960) (54,600) (55,000) (66,560) (50,600) (55,000) (25,000) $(197,160) (260,520) (200,200) (220,000) (25,000) $ (705,720) $(153,440) $(168,560) $(186,560) Excess of collections over payments Beginning cash balance Ending cash balancena 81,088 10,000 $ 91,088 3,072 91,088 $ 94,160 33,280 94,160 $ 127,440 28,136 - 127,440 $ 155,576 145,576 10,000+ $ 155,576